• Choose a category
• All
• Classic-Fiction

"No, you're not," Alan responded. Everybody knew he was bluffing. Larry and Sergey were desperate to kick-start our ad-syndication program, and a deal with AOL would leap across the Internet, creating a network effect that would bring in thousands of other sites. AOL had leverage and they used it to push harder and harder.

A key for Google was exclusivity for the placement of ads on AOL's pages. The more places to click on a page, the lower the odds a user would click on one of our syndicated ads. If Google was going to make the huge revenue guarantee AOL demanded, we would need every penny a page could generate. AOL kept offering "non-exclusive exclusivity." They drafted a ten-page section just on that topic, filled with loopholes and inconsistencies that would allow them to keep working with other partners. In the end, AOL kept the ability to run someone else's banner ads, and Google got exclusivity for text links in search results.

Then Overture counterattacked. On April 4, they filed a lawsuit claiming that "bid-for-placement" belonged to them and that AdWords Select violated their intellectual property rights. They were taking us to court.

It's not ideal, when negotiating a contract, to have your rights to the technology you're selling be called into question. AOL immediately seized on our weakened position to push for even more concessions. Now they wanted access to the intellectual property behind our ad-serving system.

"Hey, they're suing you," AOL's team reasoned. "If you go down, we've got to go back to Overture hat in hand, so we want all of your intellectual property related to the ads system. Oh, and we want more money from you as well. Up front." It was the upfront payment that threatened Google's existence. If we miscalculated the revenue flow, we would be caught in a cash crunch that would kill the company.

Like bulldogs, the AOL team tightened their grip each time they sensed an opening, gradually moving closer to the jugular. As the far smaller partner, Google kept giving in.

Alan saw a need for a tactical shift. "I think we should say no and see what they do," he said to the rest of the team. "We can always go back and say yes." Step away from a deal and see what the other side does. If they were willing to walk away, we would run back, beg forgiveness, and throw an extra million dollars at them to show our sincere regret for offending them. It was that or keep acceding to every escalating demand.

For once, though, Larry and Sergey were unwilling to take the risk. "So we just kept agreeing until we screamed," recalls Alan. "Until they came back with something really egregious." AOL asked for all of Google's intellectual property—our code and secret search algorithms—if it ever looked as if we were headed for financial ruin. They had finally gone too far. Larry, Sergey, and Eric were furious at their demand for the very heart and soul of Google. No fucking way, they agreed. Their heels dangling over the cliff, they finally refused to take another step back. Alan recognized AOL's request for what it was: the closing gambit.

"That was the signal Colburn was waiting for," Alan told me. "Did he maximize his prize? Did he get everything he could get? As long as we were willing to give, we were the gift that kept on giving." It was a classic negotiation move. The only way to find the limit was to push past it. Once AOL knew they would get nothing more, the deal could be closed. Miriam was relieved. She had spent thirty consecutive days getting by on two to four hours of sleep each night, and her hair had become noticeably thinner. At one point David Drummond, our new VP of corporate development, had grabbed her wrist to keep her from throwing a pen at one of AOL's attorneys. Even by Google standards, the stress had been nontrivial.

We still needed a final number for the guarantee—the amount that we would pay AOL even if no one clicked a single ad. It was a deep pit into which Google would jump, with the faith that AdWords Select would pull us out before it collapsed. That faith relied entirely